Investment Adviser Level1exam

1. Which of the following is a financial goal? Rs.6 lakhs required for sister’s wedding  A sizable sum needed to buy a new car in two years time Rs. 10 lakhs needed for purchasing a flat Rs.5 lakhs needed after two years to pay child’s tuition fees [Correct answer NOT NOTselected] selected]

2. Mr. Khanna requires Rs.10 lakhs in six months time to pay his son’s admission fees. An appropriate investment to set aside money for his goal would be Equity shares of high-growth companies Real estate Short term debt debt fund [Correct answer NOT NOT selected]  selected] Long term corporate bond

3. Jaya needs Rs.5 lakhs urgently for an emergency medical procedure. Which investment is she most likely to tap? Shares of Hindalco Ltd Bank deposit deposit [Correct answer answer NOT NOT selected]  selected] Gold jewellery 5-year bonds of a finance company

4. A conservative investor wants to accumulate Rs.20 lakhs in 3 years time. What would be an appropriate investment option for him? Shares of selected growth companies Bank deposits and and good quality bonds [Correct answer NOT NOT selected]  selected] Property Gold funds

5. Investment A appreciates in value by 20% after one year. Investment B appreciates by 40% after three years. Which gives a higher return? Investment B, because it has a higher absolute return Investment A, because it can be exited after just one year Investment B, because it has a higher holding period Investment A, because because it has a higher annualized return [Correct answer NOT NOTselected] selected]

6. The concept of time value of money implies that Money should be invested immediately without wasting time Due to inflation, money has a lower purchasing value in future The timing of investment influences final returns Current cash inflows can be re-invested to earn a return that increases future value [Correct answer NOT NOT selected]  selected]

7. An investor in mutual funds typically enters the fund at a certain value, and exits at another value after a specified holding period. The appropriate measure to assess his return is  Absolute return  Annualized return Holding Period Return [Correct answer answer NOT NOT selected]  selected] IRR

8. An investment in 7% tax free bonds is compared with an investment in a 9% bank deposit where interest is taxable. Both have a one year investment horizon. Which of the following is true? The bond interest is tax free so it is better For an investor who is not taxable, taxable, the bank deposit offers a better return [Correct answer NOT NOT selected]  selected] For an investor with a 30% tax rate, the bank deposit gives higher post tax return For an investor with a 10% tax rate, the bank deposit gives lower post-tax return

9. A retired person is depending on a monthly annuity income to finance his expenses. The greatest risk faced by his cash flows is

Business risk Exchange rate risk Interest rate risk Inflation risk [Correct answer NOT selected]

10. Investment in a government security issued at a fixed interest rate is subject to Credit risk Business risk Interest rate risk [Correct answer NOT selected] Liquidity risk

11. An investor purchases equity shares of a cement manufacturing company. The returns from his investment do not face Interest rate risk [Correct answer NOT selected] Credit risk Business risk Inflation risk

12. An investor holds a large portfolio of shares from different companies and industries. Her portfolio is likely to be protected from Credit risk Inflation risk Liquidity risk Unsystematic risk [Correct answer NOT selected]

13. Interest on a NSC Is paid out annually Is compounded and paid out quarterly Is accumulated and paid at the end of the term [Correct answer NOT selected]

14. Which of the following instruments under Section 80C enjoys an EEE status? ELSS PPF [Correct answer NOT selected] SCSS

15. FMPs achieve lower mark-to-market risk by investing in shorter term securities that mature before the tenor of the fund floating rate securities with reset tenor less than six months securities whose maturity matches that of the fund [Correct answer NOT selected]

16. Short term debt funds carry High mark to market risk Low mark-to-market risk [Correct answer NOT selected] No mark-to-market risk

17. Which of these asset classes is most likely to meet the objective of generating regular income? Equity Cash and equivalents Debt [Correct answer NOT selected]

18. Which of these asset classes is primarily used to meet regular needs for liquid cash? Debt Cash and equivalents [Correct answer NOT selected] Equity

19. The long term goal of an investor is to build a corpus that is adequate to serve his income needs after retirement. The portfolio when constructed, should have a higher allocation to

Debt Cash equivalents Equity [Correct answer NOT selected]

20. An investor who seeks a high level of return and is willing to bear the risks of such investments is likely to be recommended  Aggressive portfolio [Correct answer NOT selected] Conservative portfolio Moderate portfolio

21. Which of the following products is a pure insurance product? ULIP Money back policy Term insurance policy [Correct answer NOT selected] Whole life policy

22. In which of the following situations will the insured not have insurance cover? Surrendered policy [Correct answer NOT selected] Paid-up policy Term policy Both (a) and (b)

23. The premium payable on a ULIP is higher for the same sum assured as a term policy because The period of cover is shorter  A portion of the premium is used for investment [Correct answer NOT selected] The pool of insured is smaller The risk is higher

24. The term of insurance in non-life insurance is typically Decided by the insured Decided based on sum insured One year [Correct answer NOT selected] Flexible

25. Growth-oriented investments are suitable for which stage of retirement savings?  Accumulation stage [Correct answer NOT selected] Distribution stage Income stage Investment stage

26. Inflation does which of the following to retirement planning? Reduces the periodic savings required Reduces the return generated by an investment Increases the retirement corpus required [Correct answer NOT selected] Increases the value of the corpus created

27. The retirement corpus may require review Every year Every time there is a significant change in financial situation [Correct answer NOTselected] Closer to the distribution period Not at all

28. Which of the following is a solution to manage inadequacy of retirement corpus closer to retirement? Invest in riskier assets Postpone retirement [Correct answer NOT selected] Reduce periodic savings Increase corpus target

29. Commission received from business forms part of income from ___________. Business and profession [Correct answer NOT selected] Capital Gains Salary Other sources

30. Long term capital gain from sale of shares is ____________________. Taxed at 10% Exempt from tax [Correct answer NOT selected] Taxed at 20% Taxed at 15% with indexation

31. The Rajiv Gandhi Equity Savings Scheme, 2012 allows exemption up to _______ for investments made in eligible securities up to Rs. 50,000. 100% 50% [Correct answer NOT selected] 40% 60%

32. For a person to be qualified as a NRI, he must have stayed outside India for a minimum period of _____ days in a previous financial year. 365 280 182 [Correct answer NOT selected] 150

33. Which of the following persons is expected to comply with registration requirement under SEBI (Investment Advisers) Regulations, 2013: Fund Manager of an AMC  A distributor of a mutual fund who only receives commission from the AMC.  An IFA who charges advisory fees to investors [Correct answer NOT selected]  A Chartered Accountant practicing his profession

34. The minimum tangible assets to be maintained by an individual investment adviser are Rs. _______. 1 lac [Correct answer NOT selected] 25 lacs 5 lacs 10 lacs

35. Registration and regulation of securities market intermediaries is the function of _____.  AMFI SEBI [Correct answer NOT selected] PFRDA SRO

36. A person who has a complaint against an insurance company must lodge his complaint with___. SCORES IGMS [Correct answer NOT selected] CGMS RBI